Inclusive finance through financial education

Widya Anggraini, Surabaya Community Manager

Surabaya, 19 December 2014

Increasing financial access for low-income communities is a major concern for the government because financial access for these populations is currently very limited. According to the Bank of Indonesia's Household Balance Survey 2013, only 20 percent of households have access to formal financial institutions. This low level of access is caused by several factors such as low incomes, complicated banking operations, limited education about finance and banking, and expensive bank administrative fees. This situation gave rise to the inclusive finance strategy implemented by the Bank of Indonesia in order to boost the economic activity of communities that have poor access to banking services. This program is expected to promote equal distribution of income and poverty alleviation. The strategy is adopted nationally, with the goals of removing any form of hindrance in accessing and utilizing financial service. One of the pillars of inclusive finance is providing financial education to the community through programs implemented in several big cities, including Surabaya.

One of the largest financial education programs is the AYO KE BANK (Let's Go to the Bank) campaign and the launching of the TabunganKu (MySavings) product. This program opens opportunities for communities that have been unreachable by formal banking sectors so that they can access banking services, including basic products such as savings accounts, bank loans, transfers, and affordable insurance. In this scheme, those who are interested in opening an account are not charged monthly fees, initial fees, or low-deposit fees. Hence, it is expected that more members of these communities will start saving and make use of other financial services.

The financial education movement through the "Let's Go to the Bank" campaign also provides Mobil Edukasi (the Education Car), a website, and brochures. The Mobil Edukasi, filled with various books and banking resources, routinely visits schools, markets, residential areas, and office buildings. The website and brochures are used to introduce banking services such as loans, filing complaints, and ways to save and invest. This program also aims to introduce banking to the youth generation through integration into the elementary school and middle school curricula. Introduction to the function of a bank from an early age is also done by bringing students to the bank so that they can visualize and learn directly.

Inclusive finance through financial education by the Bank of Indonesia is a blueprint that started in 2008 and is implemented today through a series of programs. The application of this strategy was not easy, and many other large banks such as BRI, CIMB, and BNI have established partnerships throughout its progress. However, the Financial Literacy Survey still shows many weaknesses, whereby financial understanding is still very much affected by gender, age, education level, and geographic access to banks. Hence, a strong commitment from various sectors is needed to continually support financial education, especially for the youth generation and lower-income communities, as well as coordination and collaboration in order to sustain the inclusive finance campaign.